$1,505 Social Security check for retirees starting at 65: what you need to know to choose your retirement date

Workers are increasingly encouraged to take control of their retirement planning as soon as they enter the workforce. For most W-2 employees and those who file a 1099, part of this saving is typically done on your behalf, with your employer paying 12.4 percent of your paycheck (in theory, 6.2 percent from you and 6.2 percent from your employer) to the Social Security Adminstration (SSA). For those who qualify to claim Social Security benefits when they retire (meaning they have contributed to the SSA over at least ten years), the size of your benefit check will depend on your income over the years you paid these taxes and the age upon which you choose to retire. Those who wait until their “Full Retirement Age,” based on the year they were born, will receive a larger check than they would have if they chose to leave the workforce after becoming eligible for benefits at sixty-two.

It’s important to note that for most retirees, Social Security checks alone are often insufficient to cover living expenses. Moreover, with an imperfect system to account for the impact of inflation, the Senior Citizens League has warned that between 2000 and 2023, thirty-six percent of the purchasing power of benefits had been eroded. This means that over time, the value of the benefits will decrease, underscoring the need for additional savings or other sources of income accumulated throughout one’s career.

The decline of pensions and the rise of the private retirement account

The notion that workers should save apart from Social Security began in the 1970s and 1980s after attacks on unions in the US. This was around thirty years after the SSA began sending monthly payments to retirees.

During this time, the number of workers contributing to pension plans fell from 45 percent in 1970 to 39 percent in 1980 and 35 percent by the early 1990s. Today, this figure hovers around 11 percent for private sector workers and 75 percent for public workers. Additionally, 76 percent of all civilian workers receive a pension that was closed off to all or some new workers at least eleven years ago. As pensions have decreased, they have been replaced by private retirement accounts that can take the form of a ROTH IRA, which requires the account holder to pay tax on funds that are put into the account, and a 401(k), where taxes are paid when they are taken out before or after retiring. Just under half—49 percent— of all civilian workers are offered a plan of this nature, and of workers that are, only half of those employed in the private sector (data is not available for all workers) see contributions also made by their employer.

Considering what you really need

While these benefits are offered to most workers, not all can save enough for them to supplement Social Security upon retirement. For those between the ages of fifty-five and sixty-four, the average retirement savings is $408,420. This would be enough to last over eight years, assuming an annual budget of $50,000. Obviously, this sum could grow if a retiree waits until they are sixty-five or meet their full retirement age. But, one must consider that annual returns on your retirement savings start to decrease as funds are withdrawn. Inflation can also, in the short or long run, eat away at the value of the money saved. Whatever was put away twenty years ago has less value in real terms today.

Critically, the average amount saved is influenced by those who have saved more than $400,000. But, for most seniors, $50,000 a year is closer to their income over two years than it is to one. The Pensions Rights Center reported 2023 that “half of all older alerts had less than $29,740 in yearly income from all sources,” meaning Social Security and any private savings. In April 2024, the average retired worker received a Social Security check worth $1,915.26. Annually, this comes out to a little under $23,000, which for many seniors, let alone working households, would not be enough to live on in many communities around the country.